British people poorer in 2017 for Brexit

Britain’s trade in services with the European Union is likely to fall by 60% if the United Kingdom leaves the European single market, according to a new report by the country’s leading economic think tank. The National Institute of Economic and Social Research (NIESR) says trade in services will slump by almost two-thirds, even if Britain secures a free-trade agreement (FTA) with the EU after Brexit.

NIESR’s quarterly economic forecast predicts that the UK economy will grow by 2% in 2016, slowing to 1.4% in 2017, with the start of formal Brexit talks under article 50 of the Lisbon Treaty representing a downside risk. Consumer price inflation will rise to almost 4 per cent in the second half of next year, depressing real disposable income and consumer spending. The Times reports that it is the "first projection by a leading independent forecaster that households will be poorer after the Brexit vote."

According to institute, consumer price inflation will shoot up to 4% in the second half of 2017. The latest reading for Consumer Price Inflation is 1%, but it identifies signs of “substantial impending inflationary pressure” thanks to the almost 20 per cent depreciation of sterling against the dollar since June’s Brexit vote.

NIESR said it believes the Bank of England would now hold interest rates at 0.25% until the second half of 2019.